Tuesday, November 6, 2007

Dollar Falls to Record Low Against Euro; Fed May Lower Rates

"Conditions for subprime borrowers have the potential to get worse before they get better,'' Kroszner, the Fed's chief liason officer with the banking industry, said in remarks delivered to conferences in Arlington, Virginia and Washington yesterday. Bank of England Governor Mervyn King said today in a BBC Radio 4 interview it may take months before commercial banks publish their full losses from the U.S. subprime-mortgage slump.

"The rolling credit crisis and lack of confidence in the U.S. financial sector is heightening fears for the broader U.S. economy,'' said Greg Gibbs, a currency strategist in Sydney at ABN Amro Holding NV, the biggest Dutch bank. ``The broader outlook for the dollar still looks very challenged.''

The falling dollar isn't cause for alarm, according to David Rosenberg, chief North American economist at Merrill Lynch & Co. in New York.

``The dollar is no lower today than it was in 1997,'' Rosenberg wrote in a Nov. 2 research note. ``We don't remember that being a particular Armageddon-type time period.''

David Gaffen at the WSJ's MarketBeat blog takes us on a stroll down memory lane with:Midday Tidbits — The Dollar and the Deutschmark

The euro’s record against the dollar today needs to be viewed in two contexts — one, during the euro’s existence itself — and second, because the euro trading at $1.4571 translates to $1.3423 in Deutschmarks, which beats the all-time peak of 1.345 in the now-defunct currency, reached March 8, 1995, according to RT-ICAP.